TL;DR: President Biden increased tariffs on China, raising concerns about Chinese retaliation on U.S. agriculture. Key sectors affected include steel, semiconductors, and clean energy.
President Biden increased tariffs on $18 billion worth of imports from China on Tuesday. This decision has raised concerns that China might respond by imposing tariffs on U.S. agricultural products.
During a White House press briefing, Trade Representative Katherine Tai explained the reason behind the tariff hike. She stated that President Biden directed the increase due to China’s “unfair and anti-competitive economic practices.” The new tariffs target critical sectors, including steel, aluminium, semiconductors, electric vehicles, batteries, solar cells, and certain essential minerals.
“The increased tariffs are expected to cover approximately $18 billion of trade,” Tai said. She added that the President also initiated a process to request exclusions for specific production machinery. This move aims to allow solar and clean energy manufacturers to buy equipment while diversifying their suppliers.
The National Journal noted that Biden is continuing former President Trump’s tariff policies by keeping existing tariffs and imposing more to prevent Beijing from dominating the clean energy market.
The impact of these tariffs on the agricultural market is already visible. Todd Hultman, lead analyst for Progressive Farmer/DTN, reported that November soybean futures dropped 1 1/4 cents to $12.05 a bushel on Tuesday. Other commodities more sensitive to trade with China saw even more significant declines. The July cotton contract, for instance, closed the limit down on the news.
“They are very sensitive to China and any trade relations going bad,” Hultman said, highlighting the market’s reaction to the tariff news.